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28 F.

3d 1210

NOTICE: Fourth Circuit I.O.P. 36.6 states that citation of


unpublished dispositions is disfavored except for establishing
res judicata, estoppel, or the law of the case and requires
service of copies of cited unpublished dispositions of the Fourth
Circuit.
NIZAM'S INSTITUTE OF MEDICAL SCIENCES, a
University
established by statute, Plaintiff-Appellant,
v.
EXCHANGE TECHNOLOGIES, INCORPORATED; Vinod
Bhalla,
Defendants-Appellees,
and
FONAR CORPORATION, Defendant.
No. 93-2196.

United States Court of Appeals, Fourth Circuit.


Submitted April 5, 1994.
Decided July 5, 1994.
1

Appeal from the United States District Court for the District of Maryland, at
Baltimore. Walter E. Black, Jr., Chief District Judge. (CA-92-1638-B)

Shamala J. Bhat, Durvasula S. Sastri, Law Offices of Shamala J. Bhat, P.C.,


Silver Spring, MD, for appellant.

Jay B. Shuster, Baltimore, MD, for appellees.

D.Md.

AFFIRMED.

Before WILKINSON, WILLIAMS and MICHAEL, JJ.

OPINION
PER CURIAM
7

Nizam's Institute of Medical Sciences (N.I.M.S.), an Indian research hospital


and medical school, sought to buy a magnetic resonance imaging machine
(MRI) here in the United States. N.I.M.S. negotiated with Exchange
Technologies, Inc. (E.T.I.), for the purchase of an MRI manufactured by Fonar
Corporation. E.T.I.'s negotiations took place primarily through its
representative, Dr. Vinod Bhalla. It was clear from the tone of correspondence
that E.T.I., through Bhalla, believed that this sale of an MRI to N.I.M.S. would
be a significant break for them in the potential MRI market in India.

The two parties eventually signed a contract for the purchase, delivery and
maintenance of the MRI. The contract contained a forum selection clause in
paragraph 11. "The Contractors hereby further agree that no suit in regard to
any matter whatsoever arising under or by virtue of this Agreement shall be
instituted in any court save a court of competent jurisdiction at Hyderabad
(ANDHRA PRADESH)." The term "Contractors" is defined on a cover page to
the contract.

9 AGREEMENT made ... between M/s. Exchange Technologies Inc. ... and the
AN
Nizam's Institute of Medical Sciences, Andhra Pradesh, hereinafter called the
Contractors, which expression shall unless excluded by or repugnant to the subject
or context, include their successors, representatives, heirs, executors and
administrators of the one part and the Director, the Nizam's Institute of Medical
Sciences, Andhra Pradesh (hereinafter called the Nizam's Institute of Medical
Sciences, Andhra Pradesh which expression shall unless excluded by or repugnant to
the subject or context, include his successors in office and assigns) of the other part.
10 contract is signed on each page by Bhalla and Kakarla Subbarao as Director of
The
N.I.M.S. Bhalla signed the final page of the contract "/s/ Vinod K. Bhalla,
Contractors Signature (M/s. Exchange Technologies, Inc. Baltimore, Maryland,
U.S.A.)." In addition, a witness completed the "Acknowledgements" under the
"Forms of Certificates" in the space reserved for acknowledgement "By a
Corporation." That section noted that Bhalla appeared as the president of E.T.I. and
was authorized by the corporation to execute the contract.
11

The MRI was delivered and worked with "intermittent breakdowns" for just
over a year. When it failed in November 1990, "efforts were made" to repair it,
but they were ultimately unsuccessful. In June 1992, the time N.I.M.S. filed this
suit, the MRI was still not functional. N.I.M.S. brought this action in the

District Court for the District of Maryland alleging breach of contract, breach
of warranty, and a rather vaguely pled "misrepresentation" claim. N.I.M.S.
named as Defendants E.T.I., Bhalla in his personal capacity, and Fonar
Corporation. E.T.I. and Bhalla moved to dismiss the action pursuant to
Fed.R.Civ.P.12(b)(3) and 12(b)(6), respectively.
12

N.I.M.S. filed an opposition to the motion and E.T.I. and Bhalla filed a reply.
After oral argument, the district court granted the motion to dismiss as to the
two Defendants, finding that Bhalla had not intended to be personally bound by
the contract and that the forum selection clause of the contract applied to both
parties and was binding. N.I.M.S. noted a timely appeal to the order and
amended the notice to delete Fonar after those two parties reached a settlement
agreement.

13

This case was brought pursuant to the diversity jurisdiction of the district court.
28 U.S.C. Sec. 1332 (1988). Generally, a federal court must decide diversity
cases in accordance with state law. Erie R.R. v. Tompkins, 304 U.S. 64 (1938).
The district court should apply the substantive law of the forum state. See
Brendle v. General Tire & Rubber Co., 505 F.2d 243, 245 (4th Cir.1974).

14

N.I.M.S. initially contends that the forum selection clause should not apply to
it. It bases this contention on two theories. First, it argues that the word
"contractors" in the forum selection clause refers only to E.T.I. and Bhalla.
Second, and in the alternative, N.I.M.S. argues that even if the word
"contractors" includes it, the forum selection clause should not be valid because
it would be "unreasonable and unjust." Apparently, though not explicitly,
N.I.M.S. believes that the forum selection clause as applied to it violates due
process. Neither of these arguments has merit and the district court's order
dismissing as to E.T.I. based on the forum selection clause will be affirmed.

15

N.I.M.S.'s first argument hinges on a review of the district court's finding that
the word "contractors" in the document meant all the parties to the contract.
The district court concluded that the contract was not ambiguous on its face and
applied it accordingly. Such a conclusion is a determination of law, WorldWide Rights Ltd. Partnership v. Combe, Inc., 955 F.2d 242, 245 (4th Cir.1992),
which this Court reviews de novo on appeal from a grant of summary
dismissal. Schatz v. Rosenberg, 943 F.2d 485, 489 (4th Cir.1991), cert. denied,
60 U.S.L.W. 3652 (U.S.1992). N.I.M.S. places great emphasis on what it
describes as the "qualifier clause" in the definition of contractors. N.I.M.S.
argues the "unless excluded by or repugnant to the subject or context" language
limits when "contractors" includes both parties. This reading is strained at best.
The first portion of the contract includes the language: "M/s. Exchange

Technologies, Inc., [address] and the Nizam's Institute of Medical Sciences,


[address], hereinafter called the Contractors." This phrase is quite simply too
unequivocal to leave the reader with any interpretation other than that the
contracting parties intended the term to mean each of them. The contract is
unambiguous on its face and should be given its ordinary meaning. N.I.M.S.'s
first argument must fail.
16

Alternatively, N.I.M.S. argues that the forum selection clause should not be
given effect because its enforcement would be "unreasonable" or "unjust."1 See
The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 18 (1972). A forum selection
clause is generally binding and should be enforced unless the party seeking to
void it can "clearly show that enforcement would be unreasonable and unjust,
or that the clause was invalid for such reasons as fraud or overreaching." The
Bremen, 407 U.S. at 15; see also Carnival Cruise Lines, Inc. v. Shute, 499 U.S.
585, 595 (1991); Mercury Coal & Coke, Inc. v. Mannes-mann Pipe & Steel
Corp., 696 F.2d 315 (4th Cir.1982). N.I.M.S. does not argue that the clause is
invalid for reasons of fraud or overreaching. It contends only that the
application of the clause would be "unjust or unreasonable." According to
N.I.M.S., the clause should not be enforced because an Indian court would not
be a court of competent jurisdiction. N.I.M.S. contends that an Indian court
would lack any kind of jurisdiction over E.T.I. and that forcing it to bring a suit
against E.T.I. in India would leave it with essentially no remedy.

17

A forum selection clause "should control absent a strong showing that it should
be set aside." The Bremen, 407 U.S. at 15. The party seeking to void the clause
should "clearly show that enforcement would be unreasonable and unjust." Id.
A party claiming such a "seriously inconvenient" forum "should bear a heavy
burden of proof." Id. at 16, 17 (emphasis in original). N.I.M.S. has not met that
burden. Here, as in The Bremen, "it would be unrealistic to think that the
parties did not conduct their negotiations, ... with the consequences of the
forum clause figuring prominently in their calculations." The Bremen, 407 U.S.
at 14 (footnote omitted); see also Carnival Cruise Lines, Inc., 499 U.S. at 593
(enforcing a forum selection clause despite the fact it was not specifically
bargained for).

18

The bald assertion that India has not enacted a long arm statute, combined with
the British "adage" that "the King's writ does not run beyond his real [sic]," is
not sufficiently persuasive to ignore an otherwise valid forum selection clause.
Even if this Court assumes that this scant information regarding Indian law is
correct, these assertions do not bear the "heavy burden" to prove that it would
be unjust or unreasonable to enforce the clause. See Carnival Cruise Lines, Inc.,
499 U.S. at 595. Further, N.I.M.S. is an Indian organization, which is located in

India and ordinarily subject to Indian law. N.I.M.S. should be charged with the
knowledge of the legal implications of the clause. Because N.I.M.S. has not met
the "heavy burden," it must bear the consequences of the contract that it signed.
The district court's order dismissing E.T.I. pursuant to Rule 12(b)(3) must be
affirmed.
19

N.I.M.S. also challenges the Rule 12(b)(6) dismissal of Bhalla in his personal
capacity regarding the claim under the contract and the "misrepresentation"
claim. Because these claims were also before the court pursuant to its diversity
jurisdiction, Maryland law applies. As to the contract claim, "[t]he general rule
is that one cannot be held to a contract to which he is not a party." Porter v.
General Boiler Casing Co., 396 A.2d 1090, 1094 (Md.1979). N.I.M.S. seeks to
avoid this general rule by claiming that Bhalla intended to be bound by the
contract. In Maryland,

20
[w]hether
an officer of a corporation, signing an agreement, means to bind himself
personally, must, as a general rule, be determined by the face of the paper itself; "but
where there is such ambiguity on the face of the paper as to be consistent with either
construction, whether one means to bind himself personally, or acts only in an
official capacity, parol evidence is clearly admissible to prove the circumstances
under which the contract was made, or, in other words, to prove the true nature of
the transaction."
21

Morrison v. Baechtold, 48 A. 926, 929 (Md.1901) (citations omitted).

22

In order for the district court to have considered the parol evidence N.I.M.S.
offers as supportive of Bhalla's intent to be bound personally, there must be
"ambiguity on the face of the paper as to be consistent" with both corporate and
personal liability. Id. There is no such ambiguity here. The first page of the
contract states that the agreement is between the two corporations. The contract
does not refer to Bhalla in his personal capacity, or even mention his name.
Bhalla signed on behalf of E.T.I., and the witness completed the certificate for
signature by a corporation. The district court did not err in dismissing
N.I.M.S.'s contract claim against Bhalla personally.2 Regarding the
"misrepresentation" claim against Bhalla personally, Maryland tort law
recognizes a cause of action which is "variously known as fraud, deceit, or
intentional misrepresentation." B.N. v. K.K., 538 A.2d 1175, 1182 (Md.1988).
In Maryland, corporate officers "are personally liable for those torts which they
personally commit, ... even though performed in the name of an artificial
body." Tedrow v. Deskin, 290 A.2d 799, 802 (Md.1972). In order to state a
claim for intentional misrepresentation in Maryland, a plaintiff must allege,
among other elements, that a representation of the defendant was false and that

"either its falsity was known to [the defendant] or the misrepresentation was
made with such reckless indifference to truth to impute knowledge to him."
B.N., 538 A.2d at 1182. N.I.M.S. fails to allege that Bhalla's representations
were false when he made them. Further, N.I.M.S. did not claim in its complaint
that Bhalla knew that any of his representations about the service and
performance of the MRI were false or that Bhalla made them with reckless
indifference to whether they were truthful. Therefore, N.I.M.S. failed to state a
claim for intentional misrepresentation on which relief could be granted.
Dismissal under Rule 12(b)(6) was appropriate.
23

We dispense with oral argument because the facts and legal contentions are
adequately presented in the materials before the Court and argument would not
aid the decisional process.
AFFIRMED

This is, at least arguably, a question of substantive contract law to which state
law should apply. See Sterling Forest Assoc., Ltd. v. Barnett-Range Corp., 840
F.2d 249, 251 (4th Cir.1988) (declining to decide whether clause is procedural
or substantive but noting state and federal law were the same). Neither party
raised this issue in its brief. Because it does not appear that the district court's
application of federal law to the question is "inconsistent with substantial
justice," see Fed.R.Civ.P.61, we decline to disturb this finding sua sponte

N.I.M.S.'s arguments grounded in Maryland transfer of title law and negotiable


instrument law are, at best, unhelpful